Which statement best defines NBV?

Which statement best defines NBV?

• A. NBV equals Market value minus impairment
• B. NBV represents the asset's book value after accounting for accumulated depreciation.
• C. NBV equals Historical cost
• D. NBV equals Replacement cost

Answer: (B)

Net book value is the amount an asset is carried on the balance sheet, i.e., its cost minus the depreciation that has been recorded (and any impairment losses) over time. The statement that NBV is the asset's book value after accounting for accumulated depreciation matches this definition. For example, an asset costing 100 with 70 of accumulated depreciation has NBV of 30. It is not the market value (which reflects current trading value) or replacement cost (what it would cost to replace today), and it is not simply the original historical cost.

Net book value is the amount an asset is carried on the balance sheet, i.e., its cost minus the depreciation that has been recorded (and any impairment losses) over time. The statement that NBV is the asset's book value after accounting for accumulated depreciation matches this definition. For example, an asset costing 100 with 70 of accumulated depreciation has NBV of 30. It is not the market value (which reflects current trading value) or replacement cost (what it would cost to replace today), and it is not simply the original historical cost.